The Bank of England elected to maintain interest rates at the current 5.25% yesterday, to the surprise of no one. What wasn’t so expected was the fact that two of the nine Monetary Policy Committee members voted in favour of a rate cut. The result suggests there is a stronger appetite for monetary easing than previously assumed. The recent progress made on inflation in the UK also lends itself to a shift in policy sooner rather than later.
Such optimism no doubt contributed to the FTSE 100 finally reaching a new all-time high this week. The index had been lagging behind the major European and American indices up until recently but seems to have found its footing, brushing up against 8,400 points during yesterday’s session. The German DAX has also had a solid week so far, establishing new record highs of its own, similarly buoyed by the prospect of lower rates in the Euro.
Speaking of American indices, the latest jobs data continued to have a positive impact on the Dow Jones Industrial Average, which gained 0.85% yesterday. The S&P 500 and Nasdaq Composite weren’t far behind, climbing 0.51% and 0.27% respectively. As a very light news week draws to an end, traders will already have their eyes on next week’s more substantive offerings to orient themselves.
Minor weaknesses in the Dollar helped push gold higher on Thursday, up 1.6% to $2,345 an ounce by yesterday’s close. Silver put in a sterling performance, gaining 3.6% over the same time frame, blasting past $28 an ounce.
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